Home Bitcoin XRP: Profit Taking And Herd Mentality Fuel 40% Losses

XRP: Profit Taking And Herd Mentality Fuel 40% Losses

50
0

XRP prices have been riding a roller-coaster lately, nearly tripling in the space of a week and then plunging more than 40% following that rally.

The digital currency, which was created by the founders of Ripple, dropped to as little as $0.4415 today on CoinMarketCap.

At this point, it was down 42.6% from the recent high of $0.7694 reached on September 21, additional CoinMarketCap data shows.

The XRP token reached this level after climbing roughly 180% in the space of a week.

When explaining these sharp price fluctuations, analysts named several causes.

[Ed. note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Herd Mentality

Several analysts emphasized that the herd mentality of digital currency investors played a key role in XRP’s sharp fluctuations.

“The likelihood is a lot of investors piled in during the rush only to sell when the price started to drop,” said Matthew Newton, market analyst at social trading platform eToro.

Marouane Garcon, managing director of crypto-to-crypto derivatives platform Amulet, offered a similar take.

“With a lower barrier of entry, you have a great deal of malleable people with access to the market. They will enter and exit based off of mere influence.”

Once investors started buying, others market participants followed suit, creating substantial trading activity, claimed said Charles Hayter, co-founder and CEO of digital currency data platform CryptoCompare.

Market Reaction Expected

While XRP prices did decline notably in a short period, several analysts stated that this came as no big surprise.

After the digital token enjoyed such a sharp rally, “It is not surprising to see such a sell-off.” said Chris McClure, Chief Marketing Officer of cryptocurrency data provider Svandis.

“The rise was terribly overblown,” said Tim Enneking, Managing Director of Crypto Asset Management.

Following this sharp rally, “a market correction was expected,” stated Eric Ervin, CEO of Blockforce Capital, and “that’s exactly what we’re seeing this week.”

XRP’s Recent Price Not ‘Sustainable’

Joe DiPasquale, CEO of cryptocurrency fund of hedge funds BitBull Capital, offered a similar point of view.

“XRP’s high last week was largely off the back of a major announcement and did not appear to be sustainable.”

“As with other asset classes, when XRP jumped as much as it did, it was only a matter of time until profit takers sold off their holdings to claim the upwards of 80% gained in just a matter of days.”

Source: FORBES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.